a company on the move. Last year was the best in its history, both in terms of
overall sales and net income. Advanced Micro Devices Inc (AMD) also hit the
1-GHz landmark in March last year. Two months later, the full-speed cache ‘Thunderbird’
core was ready for prime time. Then, at the end of October, AMD unveiled its
double data rate memory-capable chipset, the 760. The highlight of AMD’s
performance last year, however, has been the Athlon processor.
The results have been spectacular. Processor and other core sales rose by
over 30% and AMD revenue, income and processor marketshare each grew
significantly in 2000. Not even the softness in the PC sales market seemed to
bother AMD, as the company posted annual sales for 2000 that were 63% higher
than in 1999. What’s more, between the processors sold early in 2000 based on
the K7 core, and those sold in the second half of the year based on the
Thunderbird core, the Athlon has achieved a 24% unit share, bringing AMD’s
total global desktop share to 17%. Not bad for a company that previously
struggled for a waning position in the value market.
The India Plan
While all this is good to write about, particularly for those who have been
waiting since long for someone to break the near monopolistic hold of Intel, one
still wonders how the $4.6-billion company plans to take on the $33.7-billion
behemoth called Intel. It would also be interesting to watch the company
replicate its success story in India.
Chong Kum Shiong, area channel manager, AMD Far East, which runs the Indian
operations through a liaison office, however, feels it is not actually an issue
of breaking someone’s monopoly. ‘‘Rather it’s the issue of increasing
marketshare in India as well as across the globe,’’ he says. This, AMD
proposes to do using a double-edge sword strategy–first, by offering products
that are better than its rival’s offers and second, by tying up with OEMs.
Additionally, AMD is also working towards sensitizing the government in India
and other agencies to make tender specifications more generic in terms of
architecture, clock and bus speed, cache level and floating point units (FPU).
Besides, it is also setting up a full-fledged Indian branch office in Q2 that
would be headed by a country manager. Not satisfied with this, AMD has also
announced an aggressive marketing program with special focus on the channel
But first things first
What about the market outlook? While the performance and value sections of
the global home PC market have firmly embraced both the Duron and Athlon
processors and only a few large suppliers, such as Dell and E-Machines, do not
carry AMD products worldwide, the scene is quite different in India. In fact,
only two OEMs have been using AMD processors for their products here–HP for
its Pavilion range and Compaq for its laptops. Despite this, according to market
estimates the company has 10-12% market share in the country, almost 100% of it
coming from the PC segment–mostly white boxes from local assemblers.
The scenario changes quite significantly in the business workstation segment,
with not a single major vendor offering an AMD corporate solution. While the
Duron and Athlon product lines are believed to have excellent price-performance
ratios for both the value and performance markets, there must have been some
valid reasons why AMD failed to prop up sales in the corporate world.
The reasons, according to experts, are clear–the baggage that it has been
carrying in the form of its K5 and K6 models have really failed to match the
competition from Intel’s Pentium II, Pentium III or Celeron. Also,
compatibility problems with motherboards, chipsets, CPU cooling devices, and
poor system drivers resulted in a mindset that an AMD
processor was not as powerful, compatible or stable as a competing Intel
Although the realities of the CPU market have since changed, old habits die
hard, and AMD continues to have a stigma associated with it. Brand loyalty is
also much higher in the corporate world and despite the fact that the company
managed to create a favorable wave with its K7 Athlon, which for the first time
surpassed the performance of a comparable Intel processor, it is yet to win the
Fortune 500 companies.
However, the single-biggest obstacle to corporate buyers choosing AMD is
simply the fact that systems featuring their products are not available.
A ray of hope
With the home market embracing the AMD Athlon and Duron processors, market
analysts see the much-needed ray of hope for AMD. Agrees Rahul Singh, senior
marketing specialist, AMD Far East Ltd, ‘‘The success in the consumer
segment is of course the first stepping stone into the commercial market,
because these great products essentially translate into the same benefits to the
home PC user and the business user alike’’. According to him, a good
experience with an AMD home PC may allay fears that AMD is not compatible or
stable enough for a corporate workstation.
|AMD’s Reseller Program|
Target for Q1 2001
A look at the company’s marketing plan for India and one realizes that the
whole energy is being channeled towards garnering corporate sales. The company
is using three distinct channels to achieve this–MNC OEMs, local OEMs and
master distributor. Says Shiong, ‘‘Our efforts are aimed at converting AMD
product from being a push to making it a pull product.’’
According to Singh, while AMD is negotiating with both MNC and local OEMs to
achieve a few workstation design wins in order to make an impact in the
corporate environment, it is also working closely with channel partners to
increase this pull. The company has already launched three marketing programs.
One, AMD reseller program aimed at strengthening the channel network. Two, AMD
& Friend program aimed at building customer loyalty amongst the end users.
Three, AMD Athlon Center at the retail showroom level aimed at increasing
product capability awareness amongst masses. The company is also working closely
with its three master distributors–Avnet Max, BBS Electronics and Intraco Tech–to
create a pull amongst the second tier OEMs (local assemblers).
An interesting bit of news leaked from Intel recently that could put an odd
twist on AMD’s multi-processing plans. It was recently discovered that the
Pentium 4 equivalent of Intel’s Xeon, named Foster, would offer SMT technology
(called Jackson). SMT, or Simultaneous Multithreading, allows multiple program
paths (threads) to be run concurrently inside the processor. SMT allows a single
processor to appear to the OS as two or more logical processors, thus giving
dual processing or better performance without having to spend the money for a
dual processor or better platform.
There is optimism in the air for AMD, which rose from the doldrums in year
2000 completely giving up its second fiddle role and surging into a comfortable
position. Looking at its product road map, the only thing that can go wrong with
this company is the timing. It is also the time for it to go for a true market
thrust into the corporate arena, which AMD is in a position to support thanks to
the success of their processor line that has made available enough cash to them.
According to reports, the company is aiming to close the year with 30% global
market share and intends to repeat the same in India. So while we wait till the
year-end to report the result of this aggressive war plan, end users can at
least hope for better computing experience.
Shubhendu Parth in New Delhi